A Digital Convergence

Fashion magazines become more like e-retailers as fashion e-retailers add magazine-like content.

Is it a magazine? Or is it an online shopping mall? Readers might ask themselves that question after they download the latest digital issue of Elle magazine for Apple Inc.'s iPad tablet computer.

The answer? It's both. And that's what it was designed to be.

Fashion magazine Elle this fall launched an app for the iPad that lets shoppers find products mentioned in an issue and click through to a retail site to buy them. That wouldn't be possible with a print magazine. And as more magazines follow their readers online, they're seeing the potential for taking advantage of the Internet to generate new fees from traffic they drive to retail sites.

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That trend is just beginning, says Robin Domeniconi, senior vice president and chief brand officer of Elle Group, a unit of magazine publisher HFM US. "Magazines are going to become more like stores," she says. "Stores underneath great content." Elle isn't the only publisher pursuing e-commerce. Male-focused online publication Thrillist.com also is adding e-commerce to its mix.

Meanwhile, retailers are converging on the online magazine space, recognizing that their customers, especially for higher-ticket fashion items, want information and fashion tips before they buy. That's led eBay Inc. and Gilt Groupe, among others, to create web magazines that tie directly to their commerce sites.

Members-only home furnishings e-retailer One Kings Lane last month acquired publishing design firm Helicopter, which will develop magazine-like online content related to the retailer's products, which range from custom-crafted sofas to antique wall maps and silkscreen prints. "One Kings Lane is poised for dramatic growth as we engage our members with the depth of information they increasingly seek when making purchases of exceptional products," says One Kings Lane CEO Doug Mack. "We envision the future of e-commerce as the convergence of retail, media and technology, and our acquisition of Helicopter positions us at the forefront of the industry."

Retailers competing with these merchants will find themselves not only competing on product and price, but also on the content that can attract and build loyalty among fashion-conscious shoppers.

Behind the convergence of online magazines and e-retail is the fact that consumers are getting more of their information on the web and less from print publications. 41% of respondents in a January poll by the Pew Center for the People and the Press say they get most of their news from the Internet, up from 35% in 2009. Meanwhile, 31% say they get most of their news from a print newspaper, down from 32% in 2009.

Where readers go, advertisers follow. U.S. online ad spending will rise 10.5% this year to reach $28.5 billion, and it will continue to rise each year for the next few years to reach $40.5 billion by 2014, according to research firm eMarketer. And eMarketer predicted in December that online ad spending would surpass newspaper advertising for the first time ever in 2010, making Internet advertising second only to TV among measured media. Meanwhile, advertising in consumer magazines fell off a cliff in 2009, decreasing 20% worldwide after a 4.5% drop in 2008, says consulting and accounting firm PricewaterhouseCoopers, which predicts two more years of declines before magazine advertising starts to rebound.

For the thrill of it

Those kinds of statistics emphasize the need for traditional print magazines to move online. But magazines already established on the web are also looking for new revenue streams beyond advertising, and e-commerce has attracted their attention.

Thrillist.com is an example of a magazine-style web site that saw the potential in expanding into online retailing. Catering to affluent young men who live in 15 U.S. and U.K. cities, Thrillist writes reviews and features on everything from local restaurants to unique clothing lines.

While it survived for five years on advertising revenue alone, CEO and co-founder Ben Lerer saw untapped sales potential. "Everyone else benefits from our content," Lerer says. "If we write about a restaurant, people will go, a store, people buy there, a clothing line, people bought the clothes. We've developed a strong bond with our readers, people trust us."

Lerer wanted to find a way to monetize that trust, and to market to the 3 million subscribers to Thrillist's free daily e-mail that dishes on local places to eat, shop and drink. He found his answer when he stumbled upon JackThreads.com, a small members-only retail site for men. Lerer says JackThreads was selling the type of clothing Thrillist writes about, and saw the potential to greatly expand sales beyond the 100,000 JackThreads members to Thrillist's much larger subscriber base.

"I went to JackThreads and said ÔWe have an audience that is way bigger than you, and you understand fulfillment and sourcing and the technology behind selling online,'" Lerer says. "There's some real potential here."

Thrillist bought JackThreads in May and since then JackThreads has grown from 100,000 to 500,000 members. Sales growth is even greater than membership growth, Lerer says, and JackThreads is now on track to sell at least $10 million a year online, Lerer says.

The content and e-commerce sites lean on each other to boost business. Thrillist links to JackThreads throughout its site in ads, and when a guy signs up for a free subscription to Thrillist, Thrillist sends him a $10 gift certificate to JackThreads.

Likewise, each new member of JackThreads gets a message encouraging him to join Thrillist. A consumer enters his ZIP code when he registers for JackThreads, and Thrillist uses that information to market its content in a personalized way. "We will say, ÔHey, we see you live in New York, do you want the insider information on all the coolest stuff to do in the city for free?'" Lerer says.